The new economy was ostensibly built on the surge in the development and diffusion of a whole raft of new information and communication technologies (ICTs) in the last decade or two of the twentieth century. The epicentre of the new economy revolution was the United States, and its impact on productivity, and economic growth more generally, was pronounced in relatively few developed economies. The policy environment was crucial in achieving the gains for growth from the application of these new technologies. Major centres for the production of ICT goods, such as Japan, seem to have been passed by in terms of the growth-enhancing impact of the new economy, presumably because the macro and micro-economic policy environment did not allow its benefits to be captured. Other countries, like Australia, not significant producers of ICT goods but with policy settings that encouraged the early application and diffusion of the new economy technologies, enjoyed even stronger productivity growth than the United States and an even longer boom. Countries in the developing world without a domestic environment conducive to the new economy, it seemed, would be increasingly marginalised from the globalised production process and the global economy (Mann and Rosen 2001)
The idea of the new economy was not confined solely to the impact of the ICTs on productivity and growth. In the euphoria that accompanied the long boom in the United States, the suggestion was that the traditional business cycle was a thing of the past, long run growth rates had been ratcheted up permanently, and the stock market was on a now continuous high. The American new economy boom lasted for a decade, but the boom has now come and gone, and there remain questions, as Cooper points out in Chapter 2, about what was really new in the new economy. There are also questions about what was new about the digital or productivity divide between developing and developed economies and within the developing economies themselves.
The APEC Leaders' Summit in Shanghai in October 2001 related the power of globalisation to stimulate growth and to improve living standards and social well-being to the impact of the new economy. The new economy, their Declaration proclaimed (pp.6-7), had the potential to raise productivity, to stimulate innovation in economic organisation and entrepreneurship and to